>You do come with some good questions, Sam.
Here's how I see it...
It most definitely is good for their profits to go offshore. But that is the short term view, which is consistent with business focus today.

>But lets look at it in the longer term.
As more and more people are displaced by offshoring, WalMart gains more and more customers (because people who could afford to go elsewhere before can now only afford WalMart after losing their jobs).
An unfortunate side-effect of this is that all levels of government suffer reduced income because the fewer salaries are smaller and the business-related taxes are disappearing. Pretty soon schools, police services, roads and other municipal/state services are minimal at best. This of course means more unemployment. Keep in mind too that all through this the level of "American productivity" is rising steady as corporations report ever-growing profits made by fewer and fewer people.
Before long the tax base is so small that municipalities fold and state governments become shells. Of course the federal level suffers accordingly as their money pool shrinks to a small puddle too.
>At this point even WalMart is losing money because virtually no one has money to buy their goods any more. The only jobs available are the non-offshoreable like deliveries, some fast food jobs, teachers, some medical jobs and that sort of thing. And there are so many people competing for those few jobs that the pay is low and the hours long.

There seems to be some evidence that supports the notion that of the umemployeed people, only a small percentage lost their jobs due to out sourcing. And that there is really nothing that can be done to prevent out sourcing. In the US, the current jobless rate is little above 5%. I know a lot of variables can figure into it, but that's where it is.

What can you really do, for that matter what can the gov't do about outsourcing?

>Et voila - a third world economy of the first order!!!!!

One person's third world is some else's first world. It's all relative. :)